The interaction between the Oil Protection Act and the Comprehensive Environmental Response, Compensation, and Liability Act over an Oil Spill Liability Trust Fund recovery can be muddy. These statutes are essentially strict liability laws that impose on the shipowner the responsibility to clean up the spill and pay certain types of damages, regardless of fault for the spill. Sometimes the shipowner or its insurer/guarantor pay for the cleanup and damages and seek a recovery from the Fund as a reimbursement, which can result in problems.
While we tend to think of all marine-related pollution incidents as oil spills, as sensationalized by the usual front page pictures in our local papers showing seagulls drenched in oil, there are many instances in a maritime setting in which a pollution incident involves both oil and hazardous chemicals. The words "oil" and "hazardous chemicals" are terms of art, defined in the statutes, regulations, and case law. Thus, it is critical for the practitioner to be familiar with both the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601, et seq. (CERCLA), and the Oil Pollution Act of 1990, 33 U.S.C. § 2701, et seq. (OPA 90).
These statutes are essentially strict liability laws that impose on the shipowner the responsibility to clean up the spill and pay certain types of damages, regardless of fault for the spill. This article will focus not on the liability for such spills, but instead on the instances in which the shipowner or its insurer/guarantor pay for the cleanup and damages and seek a recovery from the Oil Spill Liability Trust Fund as a reimbursement. It is the interaction between OPA and CERCLA over this type of recovery that makes for rough and muddied waters.
The Duties of the Responsible Party
It helps to start with some generalities. First, once the U.S. Coast Guard, Captain of the Port, designates a "responsible party"—usually the ship or the terminal from which the substance is emanating—it is then the financial burden of the responsible party or its guarantor to clean up the spill and pay damages, up to the limit of its liability under OPA and/or CERCLA (depending on whether the pollution is oil, a hazardous substance, or both kinds are leaking). Again, generally, there are two instances in which a responsible party or guarantor may seek to recover some or possibly all of the monies expended from the Oil Spill Liability Trust Fund.
The first thing to consider is whether the responsible party can prove a defense to liability under OPA. By law, there are only three types of defenses: an act of God, an act of war, or sole negligence of a third party with whom there is no contractual relationship. As is readily apparent, proving such a defense is by no means a simple task. If established, though, the responsible party generally may obtain a full recovery from the Trust Fund. There is another avenue, though, for a recovery by a responsible party against the Oil Spill Liability Trust Fund: a recovery is possible when a responsible party pays more for the cleanup and damages than the limitation amount provided by statute.
OPA 90 Limitation of Liability
Section 2708 of OPA 90 provides for tank vessels less than 3,000 gross tons, the limitation is the greater of $2 million or $1,200 per gross ton. For tank vessels greater than 3,000 gross tons, the limitation is the greater of $10 million or $1,200 per gross ton. For all vessels other than tank vessels, the limitation is the greater of $500,000 or $600 per gross ton. The statute should be consulted for more details on the types of vessels and the limitation amounts. A general understanding of the terminology is also necessary, but beyond the scope of this article.
CERCLA Limitation of Liability
Section 9607 of CERCLA provides for any vessel, other than an incineration vessel, carrying hazardous substances as cargo or residue, the limitation is the greater of $5,000,000 or $300 per gross ton. For all vessels, other than an incineration vessel, not carrying hazardous substances as cargo or residue, the limitation is the greater of $500,000 or $300 per gross ton. For incineration vessels, which CERCLA defines as "any vessel which carries hazardous substances for the purpose of incineration of such substances, so long as such substances or residues of such substances are on board," the limitation is the total of all costs of response plus $50 million.
When a pollution incident is entirely oil or entirely hazardous substances (as defined by OPA and CERCLA), then the recovery issues are fairly straightforward—that does not mean easy, just more easily understood. On the other hand, when a spill involves both OPA and CERCLA substances and the U.S. Coast Guard makes a mixed response, then recovery actions by a responsible party take on enormous complexity. Generally, a mixed response is when the Coast Guard's Captain of the Port takes on the designation as the federal on-scene coordinator under both OPA and CERCLA. Coupled with the fact that recovery actions are strictly construed by the courts, the challenge of making a reimbursement claim in a mixed response situation is made all the more difficult.
Seeking Reimbursement from the OPA Fund
The principal difficulty in obtaining a recovery under the OPA 90 Fund when there is a mixed response is that OPA specifically excludes recovery for cleanup costs and damages for CERCLA incidents. Moreover, a responsible party that has paid cleanup costs and damages in excess of the limitation value of the vessel (an important question itself) bears the heavy burden of proving that the amounts expended are for OPA—and not CERCLA—expenditures.
The Coast Guard apparently takes the position that when it is a mixed response, then there can be no recovery under the OPA Trust Fund until expenditures have exceeded the joint vessel limitation amounts noted above. Unfortunately for the responsible party, the circumstances are such that the hurdles become too high for any reasonable chance for a recovery against the Fund unless there is a clear and accurate accounting and a way to segregate the cleanup costs between OPA and CERCLA substances.
In the author's experience and from a review of the sparse case law and scholarly writings on the issue, the Fund definitely has the upper hand. See International Marine Carriers v Oil Spill Liability Trust Fund, 903 F Supp 1097, 1102-03 (SD Tex 1994) (reimbursement sought under third-party defense to liability); Apex Oil Co. v United States, 208 F Supp 2d 642, 653 (ED La 2002) (reimbursement sought under Act of God defense). The courts in both cases denied reimbursement.
Should a responsible party believe it has a shot at reimbursement, OPA has a 6-year statute of limitations after the date of completion of all removal costs in which a responsible party may seek reimbursement. To initiate a reimbursement claim, a responsible party should contact the National Pollution Funds Center, an independent arm of the Coast Guard, to obtain the appropriate forms and gauge the agency's feel as to the likelihood of recovery in that particular case.
Responsible parties should be advised that any claim for reimbursement will be a lengthy process with the Oil Spill Liability Trust Fund engaging in a fierce fight to prevent any reimbursement. There is also judicial antagonism to reimbursement. However, responsible parties have recovered from the Fund, so it can be done. In times of a mixed OPA and CERCLA response, though, be prepared for muddied and troubled waters.
The author wishes to acknowledge and thank James L. Azzarello for his assistance with this article.
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